Regulatory Alerts2012-12-19
SAMA Final Guidance on Implementing Capital Reforms Under the Basel III Framework
The Saudi Arabian Monetary Authority mandates the concurrent implementation of Basel II.5 and Basel III capital frameworks for domestic banks starting January 2013, establishing stricter definitions for Common Equity Tier 1, Additional Tier 1, and Tier 2 capital. The guidance introduces enhanced risk coverage by requiring additional capital charges for counterparty credit risk, valuation adjustments, and central counterparty exposures, while raising minimum capital ratios to 4.5 percent for equity tier 1, 6.0 percent for tier 1, and 8.0 percent for total capital against risk-weighted assets. Furthermore, regulators require banks to maintain conservation buffers, leverage ratios, and liquidity standards through a phased transition schedule extending to 2019.